Sky Gold Q2 FY26 Profit Jumps 82%, Eyes ₹7,600 Cr by FY27

Sky Gold & Diamonds, a prominent B2B gold jewellery manufacturer, has reported a robust financial performance for the second quarter of fiscal year 2026. The company achieved its highest-ever quarterly revenue and profit, driven by a significant increase in exports, strategic acquisitions, and the addition of major retail partners. With this strong momentum, Sky Gold has reaffirmed its ambitious goal of becoming a ₹7,600 crore enterprise by FY27.

Record-Breaking Q2 FY26 Financial Performance

In the quarter ending September 30, 2025, Sky Gold's revenue from operations surged by 93.1% year-on-year, reaching ₹1,484 crore compared to ₹768 crore in the same period last year. This growth translated into a substantial increase in profitability. The company's Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) grew by an impressive 157.5% to ₹99 crore. Profit After Tax (PAT) also saw a significant rise of 82% to ₹67 crore.

Sequentially, the performance remained strong, with revenue growing 31.2% over the previous quarter. The company's operational efficiency is reflected in its improved margins. The EBITDA margin expanded to 6.7%, a notable increase of 163 basis points from 5.1% in Q2 FY25. However, the PAT margin experienced a slight decline to 4.5% from 4.8% a year ago, partly due to equity dilution from a bonus issue.

Key Financial Metrics (Q2 & H1 FY26)

Operational Strength Drives Growth

The company's impressive financial results are supported by strong operational execution. Monthly production volume increased by 20% quarter-on-quarter to 544 kg. A key growth driver has been the expansion of its client base, with new partnerships established with major retailers like CaratLane, Aditya Birla's Indriya, and P.N. Gadgil. These new clients are already contributing to volume growth, with CaratLane alone sourcing 10-12 kg per month. The company's top five clients now contribute between 30-35% of its total revenue.

Exports have also provided a significant boost, doubling to approximately ₹150 crore during the quarter. This aligns with the company's strategy to increase its global footprint. Furthermore, the successful acquisition of Speed Bangle Private Limited is expected to enhance product diversity in the Italian Bangles segment and improve the working capital cycle.

Management's Vision for FY27

Commenting on the results, Managing Director Mangesh Chauhan highlighted the success of the company's strategic initiatives. He stated, “Our Q2 FY26 results reflect a continued acceleration of the strategic growth levers we put in place earlier this year.”

The management has provided a clear roadmap for the future, with a revenue guidance of ₹5,400 crore for FY26 and a target of ₹7,600 crore for FY27. A central pillar of this strategy is the expansion of international business. The company aims for exports to constitute 15-20% of total sales by FY27. The recently established B2B office in Dubai, Sky Souk Jewellery Trading LLC, is expected to be a crucial hub for this expansion, particularly in the Middle East.

Margin Dynamics and Profitability

While revenue growth has been exceptional, the management remains focused on margin enhancement. The improvement in gross margin to 8.2% from 6.5% YoY was driven by a better product mix. This includes an increase in the share of advanced gold business from 5% to 7% and a rise in studded jewellery sales. The company is also leveraging its Gold Metal Loan (GML) program to achieve interest cost savings, which should further support profitability as its utilization increases. Management has conservatively guided for a PAT margin of around 4.25% for the full fiscal year.

Addressing Cash Flow Concerns

Despite the strong profit growth, a notable weakness remains the company's cash flow from operations. The operating cash flow was negative by over ₹100 crore, and this has been a declining trend for the past two years. Management has acknowledged this challenge and expects the cash flow to turn positive only after March 2027. However, the working capital cycle has shown some improvement, reducing by 7 days between March and September 2025. Initiatives like the GML program and a focus on advanced gold customers are aimed at optimizing this cycle further.

Stock Valuation and Market Perspective

From a valuation standpoint, Sky Gold's PE ratio stands at approximately 35.07, with a P/B ratio of 4.98. This is in the context of a broader market where jewellery stocks have faced pressure in 2025, despite many companies posting strong earnings. The rising prices of gold and silver have shifted some investor interest towards ETFs and electronic gold, creating a mixed sentiment for jewellery manufacturers.

Conclusion: A Path to ₹7,600 Crore

Sky Gold & Diamonds has delivered a powerful performance in the first half of FY26, marked by exponential revenue growth, expanding margins, and strategic client wins. The company's clear vision, focused on export-led growth and operational efficiency, sets a strong foundation for its ambitious ₹7,600 crore revenue target by FY27. While the negative operating cash flow remains a key area to monitor, the strategic initiatives underway are designed to build a more resilient and profitable enterprise for the future.